I’ve heard many people lament that they do not have an estate plan.  Unbeknownst to them, this is not true.  Granted, they have not purposely prepared an estate plan nor had an estate plan prepared for them. But, they do have an estate plan. The State of California has prepared a generic estate plan for its residents who have not voluntarily prepared estate plan for themselves. The terms of this estate plan can be found in the California Probate Code and the California Health and Safety Code.

The California Probate Code and the California Health and Safety Code have created the following generic estate plan for persons who have not created one for themselves:

1.         Distribution of Assets on Death. If a person dies without a Will, he or she is said to have died “intestate.” Under the California Probate Code, the assets of a person who dies intestate (other than joint tenancy assets, community property with right of survivorship assets, and assets that have a beneficiary designation) will be administered in a probate court proceeding; subject, however, to a small estate affidavit procedure if the deceased person’s assets have a value of less than $150,000 at the time of his or her death. The beneficiaries who are entitled to receive the deceased person’s assets are determined under the California Probate Code based on several factors, including: whether the assets are community property assets or separate property assets and whether the decedent was married and had children at the time of his or her death.

California has decided who most people would have liked to have designated as their beneficiaries if they had taken the time to prepare their own estate plans. However, if the deceased person was part of an unmarried couple who are not registered domestic partners, his or her significant other will not be a beneficiary of his or her estate under the generic California estate plan. Another drawback to the generic California estate plan is that there is no tax planning to ensure that the maximum amount of the deceased person’s assets go to his or her family members.

2.         Appointing a Guardian of a Minor Child. If a person is incapacitated or deceased and does not have the ability to take care of his or her minor child (and the child’s other parent is not able to do so as well), the court will appoint a person to serve as the minor child’s guardian based on what it determines would be in the “best interest” of the minor child. The court does not know the deceased person’s family and can only make an educated guess about who would be the best person to serve as a child’s guardian.  This factor alone should cause any parent to understand why the generic California estate plan is not the best estate plan to have for their family.  Parents need to create an estate plan and designate the appropriate persons to serve as guardians of their minor children.

3.         Conservatorship.  If a person becomes incapacitated during his or her lifetime and is not able to handle his or her financial affairs or personal care, a probate court conservatorship proceeding will be commenced to appoint a conservator to manage the incapacitated person’s finances and personal care.  The California Probate Code has listed who has priority to serve as an incapacitated person’s conservator.  The persons listed in the California Probate Code who have priority to serve as conservator may not be the persons the incapacitated person would have chosen to serve as his or her conservator.

On a related note, if a person has not executed an Advance Health Care Directive and has failed to set forth his or her written wishes regarding whether or not he or she would like life-prolonging medical procedures, California will not make this decision for him or her; this is not included as part of the generic California estate plan. As noted in my April 11, 2012 blog article, Every Californian Needs An Advance Health Care Directive, if you have not stated your written wishes regarding life prolonging medical procedures and there is a disagreement between your family members on “whether or not to turn off the life support machine” when the time comes to make this decision, a lengthy and expensive court battle could ensue.

4.         Disposition of Bodily Remains Following Death.  Under the California Health and Safety Code, California has designated a list of persons who have priority to authorize the disposition of a person’s bodily remains following his or her death.

Unfortunately, the California generic estate plan is just that – generic.  It was not custom drafted for you and your family. It is probably not what you would have chosen for yourself if you had created your own estate plan. Furthermore, it does not cover all aspects of a properly prepared estate plan.

Most people, when preparing their estate plan, have the following goals: (1) avoid the probate court during life (i.e., a conservatorship) and at death; (2) designate their intended beneficiaries to receive assets either outright or in trust; (3) implement tax planning to insure that the family, and not the government, receives the maximum amount of assets under the law; (4) designate caring, trusting persons to serve as guardians for minor children; (5) designate agents to make health care decisions for them when they are not able to do so; (6) declare their position regarding life prolonging medical procedures; and (7) plan for the disposition of bodily remains, including organ donation. All of these goals are very important. These goals are not properly addressed in the generic California estate plan. So, if you currently have the generic California estate plan, you should consider opting out of it and have a custom estate plan prepared for you that meets the unique needs of your family.  At Drucker Law Offices, we meet with families on a daily basis to advise them about their estate planning options in order to create custom estate plans that meets their individual needs.

If you would like to discuss this or other trusts and estates issues, please contact the attorneys at Drucker Law Offices, 468 North Camden Drive, 2nd Floor, Beverly Hills, CA 90210, 310.285.5375 Tel, 310.444.9754 Fax, www.druckerlaw.com